Best SIPP Accounts in The UK in 2024 – Full Guide

SIPPs can be a great alternative to a conventional pension plan if you are the type of individual that likes to take full control of your money. That is to say, you will be responsible for choosing your own investments.

This can come in a range of shapes and sizes – such as traditional stocks, ETFs, and mutual funds. Crucially, SIPPs come with a number of tax-benefits – much like you would get with a pension plan.

In our Learn 2 Trade Guide on SIPPs, we explain everything there is to know. This includes a full break down of how SIPPs work, as well as the best providers currently active in the UK investment space.

 

 

What is a SIPP? 

The acronym ‘SIPP’ stands for Self Invested Personal Pension. In its most basic form, SIPPs are a do it yourself pension. It is a tax-efficient way to save up for your retirement and gives you greater control over your investments and money.  Launched 30 years ago and more popular than ever – it’s a straightforward way to save towards your later years in life.

Many of us don’t want a big company making decisions on how our savings are invested and one of the best ways to gain long term financial security is having the best possible provision. Your SIPP can be used to hold funds, shares, ETFs and even commercial property, such as business premises. Just like a traditional pension, you can gain tax-efficient savings.

On earned income contributions upto a limit of £40,000 annually, tax relief is awarded, where earnings exceed £240,000 it is reduced. Depending on when you die, you can pass your SIPP pot down to family members, and it may even be tax-free. SIPPs can also be a great way for entrepreneurs to get the same tax breaks as other pension investors get, when investing in a business.

Junior SIPPs (for children) even allows non-earners to pay £2,880 every tax year, and the Government will top it up to £3,600. Crucially, SIPPs were introduced to give people extra control over their pension pots. With that said, you need to have a long as to whether or not they are right for you.

What can you Invest in via a SIPP? 

As per UK law, there are limits to what you can invest in with a traditional pension, as it is highly likely your investment will be put into a low-risk fund. At the other end of the spectrum, SIPPs give you the freedom of investment choice. Many different investments can be put into a SIPP, including commercial property.

If you are a beginner in the investment game try not to get carried away, rather than investing in individual shares you might be better buying share-based funds, reducing your risk if an individual company was to fail 

Here are some of the investments that SIPPs can hold;

• Stocks and Shares
• Investment and Unit Trusts
• Open-Ended Investment Firms
• Government and Corporate Bonds
• Property
• ETFs
• Cash
• Shares

Unlike with a traditional pension, insurance is the only mainstream investment which you cannot invest in via SIPPs.

SIPPs: How Much do I Need? 

With a SIPP you have options such as regular monthly payments, injecting a larger sum, or a combination of the two. What is the best option for you will greatly depend on your circumstances. If you are in the prime of your life, it may be more beneficial for you to invest regular sums monthly over the course of decades.

In this way, SIPPs can be used as a great long term investment, allowing you to withstand any market corrections you are likely to experience, as well as benefiting from any capital available, and sometimes even periodic dividends. Always check out the SIPP provider’s terms as the majority of brokers will define a minimum investment threshold.

When can I get my SIPP Funds out?  

Since restrictions were lifted in April 2015, you are now allowed to get hold of money from your pension from the age of 55. If you decide to take all of your money at one time, the initial 25% would be a tax-free lump, while the rest will be taxed as income. Many people will find 55 too early to gain access to their pension, unless you have another source of income, or a large amount of capital in your SIPP.

As SIPPs are meant for later in life, there are a few stipulations to be aware of. If you die before the age of 75, your beneficiaries are able to take the entire pension pot tax-free. However, if you die after the age of 75 your beneficiaries have a few options;

• Beneficiaries can choose income drawdown or an annuity, to take a regular income which will be taxed at the income tax rate at the time.
• Another option is to take periodical lump sum payments. Sum payments are treated as income, so anything above will be taxed according to the income tax rates at the time.
• If the beneficiary decides to take the entire fund all in one go, the whole pension fund will be selected to the relevant income tax rate, as above. 

The Risks of Opting for a SIPP 

Whilst there is a greater risk by choosing a SIPP over a traditional pension, like with most things in life, where there is risk, there can also be many benefits. At the forefront of this is the chance of earning higher returns than a conventional pension provider can yield. Before you work out which SIPP is best for you, have a think about how much your investments will be worth, and what kind of investments you will hold.

SIPPS are generally suited to those of you that have knowledge of financial investments, as there are no guarantees. If you are new to financial investments, low-risk funds will more than likely be your safest option. This way, one of more fund managers will manage your investments on your behalf, whilst you maintain full control over your investments. You can also add or switch funds at a later date.

Generally speaking, the investment firm you buy through will not hold the cash, but simply acts as a channel to put your money into, whether for stocks, funds or other investments. So although highly unlikely, if your SIPPS provider became bankrupt, your money should be safely held by a separate bank or fund manager.

If any of the firms do go bust, there is in fact a compensation scheme in place. Under the standard £85,000 per person, your funds should be protected by the FCSC scheme. Protection only applies if your money is lost due to the investment provider going bust – and now an investment that goes against you. 

What Fees do SIPP Providers Charge? 

In a nutshell, companies who supply SIPPs are third-party brokers, so as expected there are a variety of different fees that you need to take into account. 

Here are some of the most relevant charges to consider.

• Set up fees: In the highly competitive market of the SIPP sector, a lot of providers won’t charge you a setup fee when you open an account. Always check this as some providers do, and it could be in the hundreds of pounds.
• Annual Maintenance: Generally speaking this will be charged against the number of SIPP funds you have, as a percentage. When investing in a fund via your SIPP, you will likely be charged an annual fund manager fee.
• Trade and deal fees: Usually in the form of the percentage of money traded, or a flat fee (fixed), it is very likely you will be subject to dealing charges when buying or selling investments. Instead of charging a yearly or monthly fee, your provider may allow you to make an unlimited amount of ‘free trades’. Consider looking into the cheapest trading charges if you are likely to be a frequent trader.
• Exit and transfer fees: Should you decide to transfer your funds to another provider or a separate pension, you are likely to be charged a fee (although some providers will do this for free, so always check). Always validate the provider’s exit fees, as some might charge you an individual fee for each investment held.

Best SIPP Providers UK

Below we’ve picked our best value SIPPs of 2023. You will need to figure out which works best for you and your needs, depending on things like:

• the size of your investment
• what you are interested in investing in
• and how frequently you buy and sell investments.

1. Hargreaves Lansdown –  Best for Newbies

Hargreaves Lansdown is a very reputable stock broker in the UK investment game. Buying and selling shares isn’t necessarily cheap, but for people with smaller portfolios and not as much experience in investing, a Hargreaves SIPP could be a good option.

Renowned for its excellent customer service, Hargreaves Lansdown even has prefabricated portfolios, for those who don’t feel fully comfortable taking charge of decisions such as choose individual instruments. It pays upto 0.35% on uninvested cash in a SIPP, which is somewhat competitive. 

Some important information on fees;

• Transfer out fee: Not applicable
• Annual charge for funds: 0.45% (upto £250,000), 0.25% (£250,000 – £1m), 0.10% (£1m-£2m), anything above £2 million will not be charged.
• Annual charge for shares: 0.45% (no more than £200)
• Buying and selling funds: No fee applicable
• Buying and selling shares: £11.95 (upto 9 deals), £8.95 (10-19 deals), £5.95 (20 deals or more)

2. Interactive Investor – Best for a Large Lump sum

If you’re planning on investing a large sum of money (by transferring from another SIPP, or directly), then Interactive Investor is a very competitive option for sums of £50k and above. 

Interactive Investor will charge you a flat administration fee of £120 per year, plus VAT. Instead of a percentage of your investment, this will be a flat fee, which is great for those of you with more sizable portfolios (at least £50k to make it worthwhile)

Some important information on fees; 

• Transfer out fee: Not applicable
• Admin fee: £10 a month ( this fee can be reduced to £6 if trading frequently
• Buying and selling funds: £7.99 or completely free for frequent investments.
• Buying and selling shares: £7.99 or completely free for frequent investments

3. AJ Bell – Best for Smaller Amounts 

AJ Bell is one of the biggest providers of administration and trustee services for SIPPs. AJ Bell may be the best option for you if you already know you are not going to have a very large pension pot (less than £50,000). 

Some important information on fees;

• Transfer-Out Fees: £75 plus £25 per holding fee
• Annual charge for funds: 0.25% ( upto £250,000), 0.10% (£250,000 – £1m), 0.05% (£1 – £2, anything above £2 million will not be charged.
• Buying and selling funds: £1.50
• Selling or buying shares: £9.95 (£4.95 for customers with over 10 share deals in the month)

4. Fidelity –  Best for Diversification

First founded in 1946 as Fidelity Investments, in 1969 an international arm was launched called Fidelity International. With over 2.4 million customers worldwide and over 240 funds in operation, Fidelity is a well-established player in this industry.

If you’re considering investing in multiple funds from Fidelity’s in-house range, consider going to them directly. With an excellent number of research tools and marketing understanding, the platform is fairly easy to use. A free UK telephone number is also available for customers with more questions.

There is an annual charge you will be required to pay, for the particular fund you invest in, this can vary depending on the fund. Fidelity funds have a higher risk factor than some others. On the flip side, you can select which funds you are interested in investing in – so you have total control. 

• Annual fee: Fidelity charges a fee of 0.35% for a SIPP, if holding a minimum of £250,000 this fee is further reduced.
• Getting started: Fidelity SIPPS can be started for as little as £50 a month, depending on your earnings. You can contribute £40,000 per annum and receive tax relief.
• Transfer fees:  Upto £500, from your previous SIPP provider, will be covered by Fidelity
• Minimum: You will need an investment of £800 to get started, another option is a small monthly payment of £40.

How to Trade via a SIPP Online – Newbie Guide

Put simply, trading via a SIPP provider is the process of buying and selling shares, usually on a long-term basis. The basic concept is to sell stocks for a higher price than you initially paid, or purchase stocks for a lower price than you initially paid.

You need to ask yourself what your needs are, for instance, do fees matter most? Or perhaps you specifically want access to international markets? There are a large number of stock brokers operating online, so you won’t be short of options.  Now all you need to do is search for a broker who accommodates your needs. In doing so, you’ll have access a vast variety of equities at the click of a mouse.

Opening an Account

So, you’ve chosen your SIPP investment site, what next? Now you need to apply to open an account. As is industry-standard in the online investment space, this entails providing a variety of information such as a name, address, date of birth, contact details, and a username and password of your choice. In order to verify your identity, you will need to upload a copy of your identification. Usually, the broker will verify it immediately.

Deposit Funds

Now you are going to need to deposit some funds so you can get started. The payment options will vary depending on the broker.

The most common payment options are:

• Debit/Credit Card
• PayPal
• Bank Wire Transfer
• Skrill
• Neteller.

Choosing Investments

You can now begin looking for stocks or other investments to trade. If you need some inspiration – have a browse through the many user-friendly guides we have listed on the Learn 2 Trade website. Once you’ve identified an asset you want to trade, you can place an order. Please find below some basic steps to get you started on your first trade.

• Make a choice between buying (long) or selling (short) 
• How much do you want to trade?
• Decide on a market/limit order
• Apply leverage (if applicable)
• Select leverage multiple
• Create a stop-loss order, so that you are mitigating your risk
• Create a take profit order, so that you lock your profits in.
• Confirm your order (this should only take a few seconds)

Closing a Position

When it comes to closing your stock trade, this will depend on what orders you place. For example,  if you placed a ‘take profit’ and ‘stop-loss’ order, this will be done automatically, because there are only two possible outcomes. You make money as a result of your ‘take profit’ being activated, or you lose money when your stop-loss order is activated.

You will only need to close your investment trade manually if you haven’t installed any orders on the stock trade. If you submitted a ‘buy order’, you will need to submit a ‘sell order’, so that you can exit the trade. If on the other hand you submitted a ‘sell order’, you need to submit a ‘buy order’ to exit.

Your proceeds will be included in your stock trading account total balance as soon as your trade is closed!

How to Choose a SIPP Provider?  

The most reputable SIPP providers are regulated by a tier-one licensing body and offer low fees, spreads and commissions. As well as leverage, short selling and a great customer service team you will need to select a platform which you find easy to navigate based on your specific needs.

You need for your chosen platform to correspond to your current trading situation, and try not to worry about additional features which you won’t use. After all, you can usually update it later down the line. Think about how many of those functions you would be using on a long-term basis. 

Here are some things to consider before taking the plunge with a SIPP provider site:

Regulation

To ensure your funds are safe, you need to make sure your stock trading platform is regulated by a body like the FCA, CySEC and ASIC.

Limits on leverage

If you have a higher appetite for risk, make sure your broker of choice supports trades with leverage. Some countries are unconstrained, so have no limits in place – meaning brokers could potentially offer leverages of upto 500:1. In the UK, leverage will be capped at 5:1 when trading stocks.

Commissions/Spreads

If you can, find a SIPP trading platform with low commissions and tight spreads. Many Brokers do offer trades commission-free, however, you may find the spread to be slightly higher. Vice versa a broker may offer zero-spreads, but high commissions.

Withdrawal policy

Often overlooked, always check how long the broker takes when processing withdrawals. The amount of time will vary from hours to days, while most begin the process of cashouts within 48 hours of your request.

Research tools

It’s important to utilize research tools that you have at your disposal. A lot of SIPP providers will offer technical analysis like chart reading tools. You will also find a broker which offers trading tips and news in real-time – which is highly beneficial.

Tradable markets

Whether you want to trade in the UK via the London Stock Exchange, or international markets – always check the number of stocks provided by the SIPP plaform, and what exchanges are accessible to you.

Payments

This one seems obvious, but it is worth noting that different SIPP trading platforms offer different payment methods. If your preference is depositing with a debit or credit card then you can usually begin trading immediately. If you want to benefit from instant deposits then E-wallets are also a good idea. When it comes to depositing funds with a bank account, you may find it takes a few days to reach your account, on the plus side you may be entitled to a higher limit.

Customer service

Ideally, you want to find a stock trading platform with 24-hour customer support, or 24/5 (in keeping with that of financial markets). Live chat is also very useful for instant support as it eliminates the need to call.

Conclusion

When deciding whether or not a SIPP is a good choice for your needs, make sure you properly investigate how much your chosen platform is going to cost you whilst you are depositing money into it. It’s also important to check the amount the platform will charge you for accessing your money in the future.

Of course, this is typically dependent on how much you’re planning to invest, and for how long, but you could find that it’s pointless having a less expensive platform to begin with, when it could end up costing an hefty amount to transfer it out.

Whilst SIPPs offers freedom and some numerous tax benefits, they aren’t for everyone. For many people a Self Invested Personal Pension is just too daunting. If you feel uncomfortable with choosing your own investments, and essentially managing your own investment portfolio (as well as the risk that entails), then it’s probably not the right pension choice for you.

By sticking with a traditional personal pension plan, at least you have a professional handling your money and investments on your behalf.